A looming strike by freight rail operators has many buckling down in preparation. The White House is pushing freight railroads and labor unions to settle on a new contract to avoid a strike that could damage the entire U.S. economy.

The potential strike has caused commuter lines to prepare for shutdowns. Metra has four lines that are on tracks owned and operated by the freight rail companies and have already planned to halt services due to the potential strike, including its busiest line, the BNSF. Metra’s other lines are currently on standby over whether they will be impacted. Amtrak has canceled all long-haul trains due to union negotiations.

Joseph Schwieterman, professor in the School for Public Service, Department of Public Policy & Sustainable Urban Development program at DePaul University, said that he isn’t really worried about commuters as work models are more flexible in the era of COVID.

“Post-pandemic, metro traffic is down. And many people are more flexible than before or even years ago. They can adjust,” said Schwieterman. He did, however, acknowledge that those who work in the service industry are the ones who will be the most affected by the disruption of operations.

Stoppages at four out of 11 Metra lines connecting Chicago to northern and western suburbs would disrupt some 80,000 trips, or about 60% of passengers, according to a spokesperson.

Schwieterman said that the assembly line will be the biggest sector that will experience pains. “Even lacking a single component can force a shutdown or a stoppage of the assembly line, and restarting operations is far more complicated than years ago, because you have inspections and computer equipment and labor shortages.”

If it occurs, the strike is said to cost the U.S. $2 billion a day. Business in the realms of auto production and food production will also see an impact, as well as oil shipments, according to Schwieterman. “And as we know, it doesn't take much to send the price of gasoline skyrocketing, even just to cut output by 10% (will) suddenly shoot it way up.”

A sudden stop in the supply of food, metal and auto parts would put plenty of Chicago companies in a bind. Kraft Heinz, Lagunitas, ADM and Mondelez may face immediate production problems. On the manufacturing side, there's Ford's massive facility in the Far South Side.

Bindiya Vakil, CEO of Resilinc, a supply-chain mapping and monitoring platform, touched on how employees such as dock and warehouse workers would be hurt the most as they won’t have any work. She also pointed out that retailers will be marking up prices, adding to the inflation issue if the strike were to occur. She also said that small businesses will also be the one of most crippled.

“The larger retail players, like the Walmart's, Amazon and others, are going out and getting as much capacity on alternative modes of transportation, like road or air freight," said Vakil. "And then, if you're a smaller player and you're like, 'let me wait and see how this goes' or 'let me see if this strike happens or not,' you're out of luck, because the capacity that's available is already gone.”

The Intermodal Association of North America sent a letter to congressional leadership last week addressing the negotiations between the unions and the freight industry. “We are writing to you regarding the current state of labor negotiations in the freight rail industry with a specific request to take any appropriate actions to avert the worst possible scenario—a national rail network shutdown as early as mid-September,” the letter stated.

IANA went on to state that failures in reaching a reasonable agreement could lead to disruptions in not only the rail industry, but also the broader supply chain, from manufacturers to retailers to consumers.

David Garofalo, director of marketing and communications at IANA, declined to comment to Crain's, stating that they prefer to let parties involved continue their work during this period of negotiation. 

On the possibility of the strike occurring, Schwieterman said that chances are 50-50. “I do think railroad labor feels a need to flex its muscle, given the degradation of working conditions, as carriers try to do more with less or squeeze more productivity out of the labor,” he said.

“The railroads have been having trouble filling openings and that empowers labor groups to push hard for a better compensation package. That gives them an ace up their sleeve; you can't threaten to replace them without great hardship,” said Schwieterman, who mentioned that Congress is exerting pressure to settle this because they don't want this to trigger further inflation or even a recession.

Currently, 10 of the 12 unions reached a deal, but two holdouts from the Brotherhood of Locomotive Engineers & Trainmen and the International Association of Sheet Metal Air, Rail & Transportation Workers account for more than 60,000 rail employees. The two unions didn’t agree to the Presidential Emergency Board’s recommendations to improve working conditions and work-life balance.

The White House is currently working with other modes of transportation, such as air and ocean freight or trucking, as negotiations seem to be uncertain before Friday. But there are no alternatives to move freight carried on rail.

"if your cargo is valuable, there's more safety (in rail transit) versus a truck that can get into an accident or gets stolen or hijacked," said Vakil on the choice to use freight to transport goods. She adds that hazardous materials are in more controlled environments when shipped by train.

“The intermodal shippers, particularly to containers, are in a really tough spot, because there simply aren't truck drivers to move a lot of those containers to and from the West Coast ports and so forth,” said Schwieterman.

The American Trucking Associations said it would require more than 460,000 additional long-haul trucks every day to fill the void.

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